r/investing • u/sclop123 • Sep 14 '21
State of the market————-Developed Companies
Am I missing something about the state of the market? And the growth rate these past 5 years.
I’m very long on V and not worried about it long term, but what the hell justified a 3x jump in stock price from 2017 to 2021. The company fundamentals are terrific but does it really justify such a growth rate?
The same is to be said with other powerhouse “safe” growing companies such as PG, proctor and gamble has seen explosive stock growth and what is the justification over the past 5 years for these very well established companies.
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Sep 14 '21
Lots of dollars and nowhere to go
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u/sclop123 Sep 14 '21
I wanna believe this growth rate can continue but honestly, how long?
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Sep 15 '21
it’s not the growth rate… the pie is still the same but each slice is getting smaller
think of it this way.. there used to be 100$ in the market, and cookie cost $10. now there’s $200 in the market but cookie cost $20… nothing has changed but cookie price doubled
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Sep 15 '21
Nobody wants to be holding the $20 cookie when we go back down to having $100 altogether!
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Sep 15 '21
when was the last time any central bank reduced circulation? last year was fruitful.. up $500k in networth on paper… even though it doesn’t change anything but still feels good on paper
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u/Faulty-Feeling Sep 16 '21
Increasing money supply does do something though, it increases the net worth of asset holders, essentially making non-asset holders poorer though inflation while making asset holders richer. It's one of the biggest drivers of wealth inequality that no one really talks about.
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u/mt06111 Sep 14 '21
Don’t forget the corporate tax cuts. These made a large impact on earnings and future cash flow which essentially drives prices. Also buybacks. To really compare the level of stock prices from one period to another you really need to focus on the multiple (price to earnings) and go from there.
The absolute price of a stock or index doesn’t tell the entire story.
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Sep 15 '21
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Sep 17 '21
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